Subject: UFTO Note — Room Temp SC
Date: Tue, 27 Aug 1996 11:11:32 -0700
From: Ed Beardsworth <edbeards@batnet.com>

Recalling that one of UFTO’s missions to to provide “early-warning radar”:

The text quoted below is from ROOTS (Room Temperature Superconductor) of Sebastopol CA. It’s part of an offering memo which can be found on the web at www.securitiesweb.com.

In your UFTO archives you’ll find a memo I wrote dated March 25, 1995 about this company. They do seem to be making significant progress, and say privately that they are getting very quiet attention from some of the top players in the field of superconductivity. They’re not in a position yet to handle big publicity, and hope they can keep things at a low profile for the time being.

If they are successful, you can say you heard it here first. Feel free to give me a call, or contact them directly.

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| *** UFTO *** Edward Beardsworth * Consultant |
| 951 Lincoln Ave. tel 415-328-5670 |
| Palo Alto CA 94301-3041 fax 415-328-5675 |
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Magnetic Power Inc. – MPI

ROOM TEMPERATURE SUPERCONDUCTORS

REVOLUTIONARY ENERGY GENERATION AND STORAGE SYSTEMS

BUSINESS DESCRIPTION

An MPI subsidiary, Room Temperature Superconductors Inc. (ROOTS), has begun commercial introduction of polymer, room-temperature, superconductors, following a decade of quiet laboratory research. These polymers enable breakthrough efficiencies for a perse range of electric systems and products, for example, to replace conventional copper wire and cable with plastic, superconducting, wire and cable.

MPI, the parent firm, is also readying near-term commercialization of technologically novel power generation and storage systems in which the Company has proprietary interests. Initially, these electric generation systems will address high-demand markets for residential, remote site and mobile power applications, including a recharge system for electric vehicles.

TARGET MARKETS

These technologies reflect a maturing of remarkable scientific and engineering breakthroughs. MPI commercial development focuses on systems which can demonstrate a competitive price, reasonable size, and on-site electric generation capabilities. Estimates of the worldwide potential power generation market range above $1 Trillion.

Room temperature superconductors, as predicted in the September ’95 and August ’96 issues of Scientific American, are likely to initiate a second industrial revolution. The markets for products incorporating refrigerated superconductors currently total $3 billion per year. These markets are predicted to grow to $8-12 billion by the year 2000.

PRODUCT AND DELIVERY STRATEGY

“Cold fusion” is becoming a commercial reality. Laboratory models of one system, the Patterson Cell, will be available for purchase (from others) before the end of 1996. Japanese firms are leading the field, spending $100 million annually. Japan’s MITI is supporting research at SRI International in Palo Alto, California. The refereed journal Fusion Technology now devotes more than 25% of each issue to this emerging science. As with a handful of analogous systems, the heat produced tends not to exceed 300 degrees F.

These new sources of energy can use MPI’s advanced heat-to-electric transducers to yield electric power. The breakthrough thermoelectric modules can also be used with many existing sources of waste heat, such as power plants and industrial systems. MPI is also participating in the development of compact, solid-state, systems that produce electricity directly. A joint-venture involves ultra high energy magnets. Ancillary technology involves breakthrough, solid-state refrigeration, ultracapacitors, low-cost photovoltaics, energy storage and hydrogen storage systems. ROOTS ambient temperature superconductors, as well as most other technology, will be carried to the pilot plant level and then produced by strategic partners. Certain energy generating systems will normally be assembled by the company.

TECHNOLOGY

For two decades worldwide superconductor research has focused on raising operating temperatures above minus 200 degrees Fahrenheit. ROOTS polymer superconductors (which are marketed as Ultraconductors) operate at ambient temperatures above 300 degrees Fahrenheit, therefore requiring no cryogenic support systems. A landmark U.S. patent is pending covering the polymer room temperature superconductors.

At least four unaffiliated domestic companies are developing low-temperature heat producing systems which they believe have commercial potential. The company has proprietary solid-state, heat-to-electric, technology that incorporates the polymer superconductors to provide electric output. Significant intellectual property rights in pertinent technology have been obtained. The securing and protecting of world-wide patents is a primary goal.

COMPETITIVE ADVANTAGES

These likely-to-be-cost-effective technologies open paths to a profound revolution in energy production and distribution. They are expected to help decentralize the production of electricity with many present utility customers substituting small on-site power plants. Electric cars will become very attractive. One scientist has stated that when 75 kilowatts (100 HP) can be generated in a car, a goal already on the horizon, his utility will begin to shut down their fossil fuel and nuclear plants and buy the necessary power from cooperating car owners while they are at work.

MANAGEMENT TEAM

Management is well respected in the field of emerging electric power generating systems. Mark Goldes, Chairman & Chief Executive Officer, has more than 20 years of experience in the field. Ken Wooller, the Chief Operating Officer, has been CEO of a venture capital funded high-tech company. Kevin Shambrook, President of both firms, is a Ph.D. Electrical Engineer, with more than 30 years of experience including management of perse engineering and manufacturing projects, corporate planning and new product introduction. Steve Nett, Marketing Director, has many years of related experience.

FINANCIAL PROJECTION SUMMARY ($ thousands)

Revenue Net Earnings

1996-97 1,000 -0-

1997-98 7,600 2,000

1998-99 17,000 5,000

1999-2000 54,000 14,000

FINANCING SOUGHT FROM ANGEL INVESTORS AND STRATEGIC PARTNERS

A minimum of $2.65 million in additional capital is needed to take advantage of specific opportunities that will result in near-term products. The aggregate investment needed from accredited investors to support the parent company’s working capital for growth is approximately $1.35 million. In addition, ROOTS, the subsidiary developing the polymer room temperature superconductors is seeking $1.3 million. See below for contact information to request a Private Placement Memorandum and Subscription Letter, etc.

PREVIOUS FUNDING SOURCES

MPI completed a Phase I and in 1996 has a Phase II, USAF contract, involving near-term applications of the polymer room temperature superconductors. In addition, more than $2 million has been provided to date from private investors.

OPERATIONS

MPI and ROOTS presently share offices and laboratory facilities in Sebastopol, 50 miles north of San Francisco near Santa Rosa, California. ROOTS also supports a staff of scientists with three floors of laboratories in Moscow, Russia. Cooperative research and development is also under way at other laboratory facilities.

ENVIRONMENTAL IMPACTS

These are all technologies which are significantly more environmentally friendly than the existing systems that they will supplement and supplant. Commercial systems are initially expected to be small in size and safe to use for the powering of homes and cars. Later, multiple modules will produce larger amounts of power useful for business and industrial plants as well as trucks, buses, trains, boats, ships and eventually aircraft. The products involved will dramatically reduce pollution and decrease dependence on oil imports, helping to avoid future oil wars and perhaps reduce related terrorism. They will also provide a major reduction in the production of greenhouse gases when compared with today’s power generating and transmission technologies.

Contact Mark Goldes, Chairman and CEO, MPI & ROOTS, for additional information.

301A N. Main St. P.O. Box 880 Sebastopol CA 95473

707-829-9391 FAX 707-829-1002

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